The 54gene, a genomics startup that received $45 million in funding over four years, and its now closing its doors.
The company was founded in 2019, located at 3 Simon Akinlolu Cred, Lagos to address a need in genetic research; currently, just 3% of the genetic material used in pharmaceutical research worldwide comes from Africa. On the other hand, internal tensions have plagued it, including the need to find a new CEO and issues with the law.
Due to the company’s financial difficulties, it was forced to reduce employee remuneration and let certain workers go. It made an effort to increase its profits by getting into the COVID-19 testing industry, which at first appeared to be a very lucrative possibility. On the other hand, the viability of this paradigm was short-lived, and a second attempt to apply molecular diagnostics was both costly and failed.
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The company’s subsidiary 7RL, which was created to provide molecular diagnostics, was experiencing frighteningly high levels of financial loss, which adversely affected the state of the business’s finances as a whole. Due to the suspension, foreign investors’ perceptions of the sector may change, which can lead to a decline in support for future endeavours of a similar nature.
It’s probable that this change will have an impact on medical technology, especially in Africa. If a major participant in the African genomics sector experiences financial problems, it might have a chilling effect on the region’s investor base and make potential supporters of similar efforts less confident. Potential investors are probably more worried about the long-term viability of healthcare organisations.
High Cost of Genomic Research
Another piece of evidence demonstrating the difficulties and high costs associated with genomic research is the failure of 54gene. Equipment costs, data storage costs, and continuing sequencing projects are all necessary but expensive aspects of genetic research. As an illustration, the price of sequencing can vary from $500 to $700 per sequence, and some biotech equipment can cost up to $1 million. Operating a business in areas with unstable electrical networks is more expensive since a steady supply of electricity is necessary.
Despite the rising prevalence of genetic and molecular diseases in Africa, 54gene failed to find success in molecular diagnosis. This raises some intriguing issues regarding the difficulties that businesses in the healthcare sector face. It is crucial to carry out a thorough examination of the market and the factors that form it, as well as the challenges that may be faced, before venturing into new terrain in the realm of healthcare technology.
The planned closure of 54gene could hinder efforts to discover a solution to this issue, given the relevance of genetic diversity in research data in Africa. Drug research and medical innovation that is specifically suited to the needs of African patients have long been hindered by the absence of comprehensive genetic data from African populations.
The halting of 54gene’s operations raises concerns about efforts to increase the genetic diversity of research data and could perhaps impede the development of novel medications for Africans.
If healthcare companies take the time to consider the lessons of financial sustainability, market research, and flexibility in the face of rapid change and difficulty in cutting-edge disciplines like genomics and healthcare technology, they will benefit greatly from the failure of 54gene.